In a cruel twist of irony, subscriptions are becoming ever-more essential to the survival of AVoD platforms. The stalwarts of internet video are set to bring in over $546 billion in revenue over the next five years, but the ad-supported business model which many of these platforms pioneered is clearly serving them no longer.
$546 billion boom led by subscription tiers, while user counts slow due to SVoD-with-ads and FAST, according to latest report from Rethink TV
A new forecast from Rethink TV finds that by 2029, subscription revenues will make up almost half of user-derived revenues for AVoD platforms, with advertising revenues holding a shrinking lead of just a few percent. In part this has been caused by the rise of SVoD-with-ads. In a bid to keep subscription fatigued users who are feeling the pinch of economic turbulence, basically every major SVoD platform (except for Apple TV) now offers some sort of discounted ad-supported tier.
Add to this the rise of FAST platforms like Tubi and Pluto TV, and suddenly the classic AVoD platforms are being slowly squeezed out of the OTT video advertising market. This has forced a strategy that is the mirror image of the SVoD story – AVoDs are now trying to double down on subscriptions.
The drive for paid subscribers has questionable merit – namely due to the subscription fatigue that most consumers feel – but an undeniable truth is that paid subs generate far more revenue than free users. By 2029, we predict that a free user on an AVoD platform will generate just $8 on average. By contrast, a paid sub will generate $39.
All of this means that the once-clear definitions surrounding OTT business models have almost blurred beyond distinction. While we still can, Rethink TV has chosen to examine SVoD, AVoD and FAST in distinct, separate reports. This is the first of three, all of which will arrive in the first half of the year.
Our SVoD forecast will include any of the large global platforms that arrived with Subscription-only models to begin – Amazon Prime Video, Apple TV+, Comcast’s Peacock, Disney+, ESPN+, Hulu, Netflix, Paramount+ and Warner Bros. Discovery Max.
In the ad-supported world, we decided to delineate an AVoD service as one that is focused on titles, while a FAST service is channel-focused. Both might feature live content, but FAST is distinct from giving the impression that it is a direct replacement for conventional broadcast TV, thanks to its linear channels.
The largest AVoD platform by any reasonable metric is YouTube. Google’s flagship video service currently holds 44% of the world’s AVoD MAUs, as well as an astonishing 62% of the global AVoD watch time. A natural follow-on from the market leader is the five Chinese AVoD platforms that collectively make up 40% of the global AVoD MAUs – BiliBili, iQIYI, Le.com, Tencent Video and Alibaba’s Youku.
The two other AVoD platforms that are notable in their global footprint are Vivendi’s Dailymotion, which is focused on news clips and UGC, and Indian video service MX Player, which is owned by Times Internet and serves premium assets. Aside from that, we have Sony’s anime-focused video service Crunchyroll, Fandango At Home, which is Fandango Media’s rebranding of Vudu, Rakuten-owned Viki, PCCW-owned Viu, and Viacom18’s Voot platform, with the latter three largely APAC-based. All of these platforms focus on ‘premium’ content, with a market share of global AVoD MAUs hanging somewhere around 1%.
This is the latest forecast in the Rethink TV Archive, which now includes:
- AVoD Market Forecast
- WiFi Market Forecast
- Operator Technology Choices and KPIs
- The Unstoppable Rise of Social Media Video
- Impact of Strikes and Inflation on Content Spending
- Set Top & Smart TV and Connected TV Device Operating System Forecast
- Media & Entertainment Codecs Market
- AVoD, FAST, and SVoD Market Forecast
- Sports Rights Forecast
- Investigating the Energy Use of Video Delivery and Consumption
- Video Delivery Market Forecast
- Open Internet Contribution Protocols Forecast
- Content Recommendations Software Forecast
- Low Latency Distribution Protocol Forecast
- Multicast-ABR Forecast
Rethink Technology Research is an analyst firm that has established itself over its 22-year history as a thought leader in 5G, and all forms of wireless; the entertainment ecosystem and streaming media; the Internet of Things; and has now embarked on the energy marketplace. Rethink TV is our video research team, producing market forecasts, technology white papers and tracking operator-technology vendor relationships in OTT video.
Rethink Research has been publishing, forecasting, consulting and ‘telling it like it is’ in the technology world, for more than 20 years. What our clients most like about us is our independent, non-biased research; regularly picking the brains of industry executives to provide our readers with no-nonsense insights that are impossible to find anywhere else. And, unlike other analyst groups, we don’t sugar-coat how tough the future will be.
